By Henrietta Cook
In what is believed to be an Australian first, Victorian authorities have seized millions of dollars of the digital currency, bitcoin, allegedly the proceeds of online drug trafficking.
The Director of Public Prosecutions obtained a restraining order on bitcoins from the alleged drug traffickers' online wallet in 2012/13, according to its latest annual report.
The digital currency is used by a small, but growing, number of Australian businesses and has also been adopted by criminals.
"Several million dollars" worth of bitcoins were seized under the Confiscation Act, the report said.
The report, which was tabled in state parliament on Tuesday, said bitcoins appealed to criminals because they left no financial trail.
"Criminals have embraced the digital currency to transact in illicit goods and to launder money across borders, posing a challenge to law enforcement."
It said if the accused was convicted, the bitcoins would be forfeited to the state.
A spokeswoman for the Office of Public Prosecutions said she could not comment because the matter was before the courts. Details of the case have been suppressed.
It is unclear whether any seized bitcoins would be auctioned off by the state or sold on open bitcoin exchanges.
The encrypted currency has been used by other alleged drug traffickers on the now-defunct black market Silk Road website, where illicit drugs were sold and sent to users in the mail.
It is bought and sold on open exchanges, where its value can fluctuate wildly.
In the US earlier this year, the FBI and federal prosecutors organised an online auction of 30,000 bitcoins seized from Silk Road.
Potential bidders were screened to ensure they were not interested in using the bitcoins for illegal activity.
The OPP confiscated $10.4 million in proceeds of crime last financial year.